The chief executive of APN News & Media, Mr Cameron O'Reilly, is to leave the group to pursue private business interests. The surprise departure was announced to the APN board on Monday.

Mr O'Reilly is a son of Dr Tony O'Reilly, chairman of Independent News & Media (Independent Newspapers) which owns 41 per cent of APN, the media group which is based in Australia. Mr O'Reilly will vacate his post next June.

Mr O'Reilly (35), who has spent 12 years at APN, will remain as a non-executive director. He is also a director on the main Independent News & Media board.

Mr O'Reilly, who is well regarded in business circles, had been tipped as a strong candidate to succeed Mr Liam Healy, chief executive of Independent Newspapers, when he retires. His younger brother Mr Gavin O'Reilly - managing director of Independent Newspapers (Ireland) - is also considered a candidate. APN is Australia's largest operator of regional newspapers, radio stations and outdoor advertising. In an in-depth interview in the Financial Times just 2 1/2 weeks ago, Mr O'Reilly gave no hint of his intended departure.

He admitted in the interview that the newspaper market is "going through something of an identity crisis" - as it faced competition from online news and publishers. He argued that newspapers would be around for a long time to come.

The article also pointed out that there was constant speculation about when Mr O'Reilly would take over from his father, who is chairman of the group. A spokesman for Independent confirmed last night that Mr O'Reilly would be pursuing business interests not related to the newspaper group. It is understood that he will be involved in the family's private business interests. These include Lockwood, a US-based fund management group with assets under management of $6 billion.

It is unclear where Mr O'Reilly will be based when he returns to Europe. He is married with a young family. In a statement last night, he said he felt "now is an opportune time for me and my family to return to Europe, and for me to pursue several private business interests".

Mr Healy said Mr O'Reilly had made an enormous contribution to the development of APN since it was floated in 1992. "The company has grown from a Queensland-based newspaper company into one of Australia's most broadly based media companies."

Over the last seven years, he added, APN had had an average annual compound growth in net profits of 17 per cent "and over the last five years has had the highest growth in normalised earnings per share of any major Australian media company".

Mr Healy added that the company was on track for its seventh consecutive year of net profit growth.

Mr O'Reilly will be succeeded by Mr Vincent Crowley, group finance director. Mr Crowley has been a director of APN since 1994.